July 26, 2007 — Local government departments and agencies stand to face a two- percent cut in their allotments for the rest of the fiscal year to accommodate an expected $32 to $35 million shortfall, Budget Director Debra Gottlieb told the Legislature's Finance Committee Thursday.
"I want to spread it around, but I haven't made a final determination," she said.
Funding that falls under the miscellaneous portion of the budget may see cuts up to five percent, Gottlieb said. As things stand now, the government expects to take in $806 million in revenues by the end of the fiscal year on Sept. 30, she said. However, the Legislature has appropriated $838 million. She promised updated figures when the Legislature meets to discuss final recommendations for the 2008 budget.
Gottlieb and her senior staff members were at the Legislature to defend the $6.3 million fiscal year 2008 budget for the Office of Management and Budget (OMB). Of that figure, $3.3 million is expected to come from the General Fund and $3 million from the indirect cost fund.
Gottlieb told the senators she plans to fill the department's eight vacant positions as well as add four or five employees to her staff of 39 people. Some of those people will work on the government's performance-based budgeting program.
"When you get new personnel, you have to get space, desks and training," she said.
Gottlieb also needs to increase salaries to become competitive with other government departments that pay better, she said. OMB salaries were last adjusted in 2002, she said. OMB is now responsible for paying for the administration of Federal Emergency Management Agency funds because FEMA will no longer assume that financial responsibility, Gottlieb said. The Budget office didn't get any money in the 2007 budget and won't get any for 2008, she said.
The territory received $259 million to cover expenses for seven natural disasters, starting with Hurricane Hugo in 1989. The money included the November 2003 flooding. Of that figure, $1.6 million received for Tropical Storm Jeanne and $1.4 million for the November 2003 flooding has not been spent.
Gottlieb asked the senators to approve lump-sum budgets to improve efficiency, but Nelson said he didn't favor that idea.
"When you have lump-sum budgets, you have people shuffling things around," said committee Chairman Sen. Terrence "Positive" Nelson.
Sen. Juan Figueroa-Serville took the administration to task for not allotting money appropriated long ago by the Legislature.
"This power struggle between the administration and the Legislature has got to stop," he said.
The previous and current Legislatures appropriated about $7.7 million for road repairs on St. Thomas and St. Croix that has not yet been allotted, Figueroa-Serville said. He plans to offer an amendment at the next session to ensure that allotment remains available and doesn’t expire at the end of the fiscal year.
The subject of the unfunded liability at the Government Employees’ Retirement System came up several times.
"If that system fails, we will be in a crisis," said Sen. Basil Ottley, who is not a committee member. “I don't think we can anticipate the impact on our fragile economy.”
Sen. Louis P. Hill, also not a committee member, pinned the government's financial problems squarely on the shoulders of the Legislature.
"All of the debt we're in right now, it's because the senators voted for it," he said.
Gottlieb acknowledged there have been glitches in getting the enterprise planning resource system — which links together the financial books of government entities — up and running, but said things should be smoother by the end of the calendar year.
Attending the meeting were Sens. Nelson, Figueroa-Serville, Liston Davis, Carlton Dowe, James Weber and Neville James. Sen. Ronald Russell was absent.
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